BreakOut Nations :- because “Where else will the Money Go.”

breakout-nations

3.5 Stars out of 5

I so wish that i had read this book 3 years back, not only because the statistics and assumptions considered in the book would have been much more relevant, but also because this would have considerably helped me in my “Country Analysis” assignment, in the course of my Masters. Oh well, better late than never i Suppose.

Economics ,is a fascinating study, to which i got acquainted quite late in life but it turned out to be one of those things that you instantly like(Specially Macroeconomics) and are surprised by the fact that you didn’t come across them sooner. Ruchir Sharma has managed to do the impossible with Economics in this book, he has kept the brush strokes broad enough that a layman could understand and appreciate the overall picture & he has kept the same strokes fine enough in places so that an expert or enthusiast could really enjoy the process and take away some major points with them.

One of the worst and best things about reading Non-fiction is that it is a SLOW process, it HAS to be, there is no other way to do it, between readings you have to stop & digress, to let it sink in,do a little side research of your own,read some history ,some present news,relate and revel in the topic entirely. And on that account Breakout nations does a bang on job, Mr. Sharma has used a LOT of research in this book, he has discussed about almost every important Nation and Area on the globe.Giving you insights and a lot to think about. This book talks about Nations and their progress towards economic marvels, specially about the emerging nations and who among them will ‘Break out’ as the fastest & most durable in the race towards growth and prosperity. It does so ,by systematically analyzing one emerging nation at a time.As it is a non fiction,we don’t have to worry about spoilers , so some of the takeaways in brief from the book are:-

  • Always judge or predict about Nations within a limited time frame, preferably 5 years, the world is too dynamic for predictions of long run .i.e 10, 20, 30 years ahead.
  • China, will slow down to  <=6% GDP growth rate, and that’s not a bad thing, for a country with 5000$ per capita income , this is acceptable.The richer you grow the slower you become, because that’s just the natural way of things.
  • India, still down in the dumps, crony capitalism(read Corruption) a big hurdle, has to grow infrastructure in a major way,population could be an asset, but should be properly educated and motivated and given opportunists.Having unrealistic growth plans could hurt.50/50 of breaking out.(My interjection :- yeah, fingers crossed alright.)
  • The debate btw Democracy & Authoritarian Regime as a model for ECONOMIC growth is mute and void , Stability and Efficient leadership with Competent implementation are the key to success (My view :- The reds in China are motivated enough, without delivering on economic growth they won’t be able to stay in power ,however much oppressive they may be. Indians argument that we have ‘democracy’  does not & should not be an excuse or counter argument to slow growth. Fast-track reforms and impeccable implementation of the Chinese should be a model for us too.)
  • Brazil,going strong on raw materials and commodity export, %age investment as per GDP is low, poor infrastructure,trying to become a welfare state too early, should invest more inwards specially on infra. A slowing china could hurt Brazil.
  • Mexico, oligarchy prevalent,controlled market, inequality could hurt, breaking monopolies and improving law & order and infra would help.
  • Russia, overly dependent on oil and gas, no major corporate brand on the international forum,tycoons investing money outside the country rather than inside, no trust in the regimes growth agenda, no other major investment sector,long term by the same leader has lead to lethargy in reforms.(My Interjection :- I still like Putin, just because he is a badass, yes i am biased, Sue me!.)
  • South Africa, still enjoying the bliss of getting rid of the ‘Apartheid’ regime,less focus on growth more on welfare activities,slow reforms lead to slow growth despite having a strong financial market.
  • Turkey, could be a breakout nation,Erdogan giving turkey a new Muslim identity, AKP trying to look towards east(and not only to the the EU) a good thing   (My view :- As the book was written in 2011,I could understand this stand, but we know what happened,’Syria’ & a Coup attempt has rattled Turkey, the country despite having a lot of advantages still suffers because the one prerequisite for growth still alludes it,  Stability.)
  • Poland & Czech republic, going strong and going good,took the hard way to comeback, the darling states of Europe,crossing their t’s and dotting their i’s the right way, stalling on the Euro & waiting for things to settle down.Could be a breakout nation.
  • The mess of the Southeast Asia, Thailand :- red shirts (Elites) vs yellow Shirts( Rural) tension,disproportionate growth, Vietnam :-trying to be China, unrealistic, bad management by the communist elites, Philippines :-Corruption,low savings,high consumption,but has potential KPO,BPO could take off in a good way.
  • The Gulf :- The bliss of black Gold propping up the whole region, has to find alternative sources for the economy as well, Oman still has enough oil to last a century, a lot of superficial attempts by the gulf nations without having any major impact.The gulf countries are still secure in the oil cocoon, the competition from ‘Shale’ gas could hurt them.
  • America,still has the advantage of technology,strong R&D and Dollar as the global reserve currency, could still carry on strong and be a breakout nation among the rich countries.
  • Commodity.com, the ever rising prices of commodity can’t go on forever,slowing China and global demand will lead to dropping of prices, this could hurt major raw material and commodity export economies, they will have to make major inroads in domestic consumption and manufacturing finished goods.
  • The third coming of the emerging markets, the economies will grow but detached and more isolated than before, the same wind of globalization won’t carry all the counties like in the past, no global tailwind ,everyone has to ‘Row’ .

No doubt I have missed a lot of points and arguments from the book, leave alone all the number and stats proving the points.Well, you will just have to read it won’t you.

Now to the negative, the book is well researched and well written. The reasoning is logical and easy to follow but the book is now ‘Outdated’ ,it’s 2017, many of the predictions and assumptions of the author didn’t pan out precisely because of his initial argument,its been more than 5 years, the world dynamics has changed, ‘TRUMP’ leads the US ,and talks of ‘Protectionism’ are heard everywhere in the world, the chaos in the middle east is still to be sorted. Just because i picked up this book a bit late i couldn’t give it a higher rating.

But to understand the nuances and arguments of how to actually judge an economy or a breakout country more accurately, i most definitely recommend this to anyone remotely interested in economics.The process followed by Ruchir sharma is to be studied and studied well, his ‘rules of the road’  noted, Politics and Economy are not as isolated as people think, how a capable leader could breakout Nigeria or an inept management doom a previously bright star like Vietnam is to be really understood, one has to look at a lot of aspects and for going that distance , and explaining it in marvelous simplicity i respect the author greatly.

This is a great work though a bit out of sync with the current time but we could hardly fault the author,because as he states in the first chapter itself that:-

As much as we all love the speculative titillation of futurology, no one can forecast the next century with any credibility and, more important, be held accountable for it.”

 

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